Measuring Customer Satisfaction: How NPS Drives Enhanced Customer Engagement

You already know just how important customer satisfaction is. But things are evolving—and fast. 59% of consumers think how they currently interact with companies will change completely. And they believe this change will come in the next two years.

In this environment, you need as much insight into your customers, their experiences, and their expectations as possible. You need cold, hard data to back your continuous improvement efforts.

This is where the Net Promoter Score℠ (NPS) comes in.

NPS for customer engagement is a simple tool, but it’s also extremely powerful. It gives you a way to quantify customer loyalty and satisfaction like never before.

It’s a window into what your customers really think about your business. You can use these insights to make improvements where it counts.

In this article, we’ll explain what NPS is and how it relates to customer engagement.

We’ll give you guidance on using NPS data to improve engagement. Finally, we’ll wrap up with a few actionable tips you can implement today to get started.

What Is NPS?

NPS stands for Net Promoter Score. Think of it as a measure of customer loyalty.

Fred Reichheld of Bain & Company created it in 2003, and many businesses use it today.

How Is NPS Calculated?

Calculating your NPS is extremely simple. It all starts with a single survey question:

How likely are you to recommend our company to a friend or colleague?

Customers rate their answers on a scale between 0 and 10.

Depending on their rating, each customer is labeled as one of the following:

• Promoter: These are customers who give a score of 9 or 10. They are very happy with your service and will tell others about your company.
• Passive: These customers rate their answer at 7 or 8. They are satisfied but not enthusiastic. They might switch to a competitor.
• Detractor: These are customers who choose a score between 0 and 6. They are unhappy and may tell others not to use your service.

To calculate your NPS, you subtract the percentage of Detractors from the percentage of Promoters. Here’s the formula:

Promoter (%) – Detractors (%) = NPS

Let’s say 80% of your customers are Promoters, 10% are Passives, and 10% are Detractors. To calculate your score, you would use this equation:

80 – 10 = 70

Your NPS is 70.

FROM ONE OF OUR PARTNERS: What is a Net Promoter Score and Why Does It Matter?

Why Is NPS Valuable for Business Leaders?

Customer loyalty and satisfaction can be difficult to measure. NPS is a concrete solution that gives you clear-cut data to work with.

It’s quick and easy to calculate. It’s also a solid growth predictor. A high NPS means greater customer loyalty. Greater customer loyalty can translate into future growth.

Finally, NPS allows you to focus on making improvements that matter most to your customers. You can follow up with Detractors and fix the issues they mention.

The Relationship Between NPS and Customer Engagement

Customer engagement encompasses both customer loyalty and satisfaction:

• Loyal customers choose your business time and time again.
• Satisfied customers feel like their needs were met or exceeded.

Engaged customers are more likely to recommend your business to others. This is what makes NPS a key metric for measuring customer engagement.

Promoters are both satisfied with your services and loyal to your brand. They will attract new customers through positive word-of-mouth.

Let’s dig a little deeper.

How NPS Reflects Customer Loyalty and Satisfaction

Remember, NPS divides your customers into Promoters, Passives, and Detractors. This classification gives you clear insights into their levels of loyalty and satisfaction:

• Promoters are very satisfied and loyal. They actively engage with your brand and recommend it to others. Their high level of engagement drives business growth.
• Passives are satisfied but not over the moon. They may use your services again but are not fully engaged. They are vulnerable to competitive offers.
• Detractors are dissatisfied and may damage your brand through negative reviews. Their low engagement indicates areas needing improvement.

FROM ONE OF OUR PARTNERS: How to Get Customers to Leave Reviews for Your Local Home Services Business

How to Use NPS to Identify and Improve Customer Engagement

Yes, NPS is a measurement tool. But it’s also a compass. It guides you toward meaningful action.

Here’s how you can use NPS to drive up customer engagement levels in three steps:

• Step 1: Collect and analyze feedback. Pay careful attention to comments and feedback. Promoters’ comments show what’s working. Detractors’ feedback highlights pain points. Look for trends in this data. For example, if Detractors often mention long wait times, fixing this issue should become a priority.
• Step 2: Make targeted improvements. Use the feedback to improve the areas most frequently mentioned by Detractors.
• Step 3: Track your progress and optimize. Make a habit of collecting feedback and calculating your NPS regularly. That way, you can monitor changes in customer engagement. An increasing NPS indicates that your actions are working. If your NPS drops, it signals new issues or areas that need attention.

Let’s look at a few examples to see how this process might play out.

Example 1: Improving Service Speed

Many Detractors complain about slow service. Implement new strategies for three months. This reduces average wait times.

Then, you calculate your NPS and find a 20% increase.

Example 2: Boosting Product Quality

Feedback from Passives highlights features they find satisfactory but not outstanding. You can enhance these features to turn Passives into Promoters.

By improving your product based on NPS feedback, you may see higher customer retention rates.

Example 3: Enhancing Staff Training

Positive feedback from Promoters about friendly and helpful staff shows the importance of good customer service.

Training all your staff to meet this standard can lift your NPS and customer engagement.

 

RELATED ARTICLE: The Art of NPS: How to Improve Your Fitness Franchise Network’s Score

How NPS Drives Enhanced Customer Engagement

As a business leader, you want to enhance customer engagement. Engaged customers are loyal. They buy more and tell others about your business.

High customer engagement means better growth and success now—and in the future.

NPS helps you improve customer engagement in several ways. Here are a few:

Identifying Loyal Customers

Your NPS customer engagement results help you find your most loyal customers. They love your business and recommend it to others. So, they are extremely valuable to your company.

When you know who these customers are, you can put in extra effort to keep them happy. This boosts their engagement even more.

Take action: Send special offers or thank-you notes to Promoters. This makes them feel valued and keeps them engaged.

Spotting Unhappy Customers

NPS also helps you find customers who are not satisfied. They are unhappy and might tell others about their bad experience.

Use their feedback to address critical issues. You might turn them into Passives or Promoters. Even if you don’t, you maximize your chances of engaging new, satisfied, and loyal customers.

Take action: Get in touch with Detractors. Learn more about their problem. You might offer a solution or compensation.

Segmenting Customers for Targeted Marketing

NPS data allows you to segment your customers based on their scores. You can then create targeted marketing strategies for each segment. For example:

Give Promoters access to exclusive deals to maintain their loyalty.

Give Passives special incentives to increase their engagement.

Give Detractors personalized support to address their problems.

Take action: Brainstorm ways your marketing can best attract, engage, and convert your audiences.

Improving Customer Experience

Feedback from NPS surveys shows what customers like and dislike.

Promoters’ comments highlight what you are doing well. Detractors’ feedback shows what needs fixing.

Use this information to improve your services and products. Better experiences lead to higher engagement.

Take action: Look for trends in the survey responses. If 80% of Detractors complain about your website’s functionality, for example, put fixing it at the top of your to-do list.

Tracking Progress

Regularly checking your NPS helps you see how changes affect customer engagement.

If your NPS goes up, more customers will be happy and engaged. If it goes down, you know there are new issues to address.

Take action: Decide how often you’ll calculate your NPS. Schedule surveys ahead of time to automate the process.

 

RELATED ARTICLE: What is Net Promoter Score?

Start Leveraging NPS for Better Customer Engagement Right Now

To improve customer engagement using NPS, start with these simple steps:

• Create your survey. Create a survey with the NPS question: “How likely are you to recommend our company to a friend or colleague?” Use tools like SurveyMonkey or TypeForm to collect responses.
• Consider investing in software. Use software to automate your NPS surveys. These tools also analyze the data for you, making it easier to understand the results.
• Decide the best way to distribute your survey. This will likely be via email. Try A/B testing different subject lines and messages to see which gets better open rates and more responses.
• Map an action plan. Think about how you will use the NPS data. Set specific goals and timelines for making improvements.
• Follow up. Share your improvements with customers. Let them know you listened to their feedback. This can increase their satisfaction and engagement.